The recent US-China trade truce has sparked positive changes in financial markets and led to Bitcoin price increases. This article analyzes how this agreement may affect global liquidity and the cryptocurrency market.
Markets Exhale: Tariff Pressures Ease
On May 11-12, the United States and China announced a temporary truce in their ongoing trade dispute, immediately providing relief to global markets. After months of escalating tariffs and economic uncertainty, both sides agreed to a 90-day pause on new trade restrictions. As per the agreement, the U.S. reduced tariffs on $350 billion worth of Chinese imports from 145% to 30%, while China cut duties on $120 billion in American goods from 125% to 10%. The agreement also includes commitments from China to resume Boeing aircraft purchases and to import $50 billion annually in U.S. soybeans and liquefied natural gas.
Bitcoin on the Rise: Risk Appetite Returns
Bitcoin's response to the trade truce was immediate and sharply directional. On May 11, ahead of the official announcement, BTC was already trading near $100,000. Following confirmation of the tariff cuts on May 12, Bitcoin climbed to reach $105,740, its highest level in over a month. As of this writing, BTC is trading near $104,400, up nearly 2% over the previous 24 hours. The cryptocurrency market also witnessed an uptrend: Ethereum rose nearly 44%, and the total cryptocurrency market cap has reached $3.32 trillion.
Inflation Cools: Rate Cut Odds Rise
The broader macroeconomic backdrop is beginning to shift in response to the U.S.-China trade deal. The easing of tariffs may lead to a decrease in trade-driven inflation, potentially opening doors for the Federal Reserve to cut interest rates. Recent CPI data for April confirmed this cooling trend, with headline inflation falling to 2.3% year-on-year, below expectations of 2.4%. However, it is important to note that the truce is only temporary, and upcoming negotiations could bring new challenges.
The U.S.-China trade truce has had a significant impact on financial markets, including the cryptocurrency sector. Bitcoin and other digital assets will continue to respond to changes in economic policy and geopolitical dynamics, making this an important time for monitoring trends.
